Meeting the challenges of growth in Asia

The key to future success in Asia Pacific - and indeed in the rest of the world - will be innovation. Innovation in accessing energy, in providing new chemical feedstock sources and developing cleaner, more energy efficient technology and products.

At Shell, we believe this challenge has three hard truths (see panel below).

Petrochemicals demand
In China, where the population is already 1.3 billion, demand for energy and petrochemicals is soaring. In 2006 alone, China expanded its electricity capacity by an amount broadly equivalent to that generated by all of the power stations in one of Western Europe's larger countries. There is similar accelerating growth in India.

The resultant growth in demand for petrochemicals in Asia Pacific between 2006 and 2011 is expected to be 5.9%, almost twice the rate of growth anticipated in the Americas and Europe.

Where will the feedstock come from to meet this demand? In the medium to long term we are likely to face significant challenges in accessing traditional sources of feedstocks and in developing new ones. It is also likely that there will be increased competition for resources between fuels and petrochemicals.

Future energies
By 2015, growth in conventional oil and gas production will not match the projected demand growth, increasing the need to access unconventional sources such as oil sands.

On the petrochemicals side, we are already extending the range of available feedstocks that can be processed and developing new routes such as gas-to-liquids and bio-routes. We are also seeing the reinvention of the coal-to-chemicals industry. In China, Shell's coal-to fuels technology is already being used and we are also exploring the chemicals possibilities.

Climate change
As demand increases, so does the pressure to take steps to reduce environmental impacts, particularly CO2 emissions. To respond to the major cuts envisaged, we will need to develop large-scale carbon capture and storage systems. We believe the required technology will be available, but to make this effective globally, governments will need to build a CO2 policy framework. They will also need to take action to support and stimulate the needed investment.

Shell's response
How will Shell respond to all of these major challenges? In the coming years we will need to apply all of our creative talents to the full, in cooperation with the wider scientific community, other industries and governments, to find solutions. But we can and will develop new energy resources. We can and will develop new feedstock routes. And we have shown an ability to increase our energy efficiency and reduce the environmental footprints of our plants and processes.

We are already underlining our commitment to the Asia Pacific region with newly-completed and ongoing projects in China and Singapore. The future in this region continues to be very exciting.

Three hard truths:

• Energy demand is increasing. By 2050, the world could be using double the amount of energy used today.
• We cannot continue to rely on 'easy oil' supplies. In future, oil and gas extraction will be more costly and require new skills.
• CO2 emissions are rising even faster than demand for energy. This could have serious climate change consequences.

This feature was added to the Innovations section in May 2008. It is based on a presentation made by Shell Chemicals Executive Vice President, Ben van Beurden, to the 2008 Asia Petrochemical Industry Conference. Select the presentation option in the links module to read the full text.